Inline versus floating graphics

Graphics can be inserted into a document "inline" rather than floating in the
draw layer. When a graphic is inserted this way, it behaves in almost all
respects like a text character. That is, it flows on the page the same way text
flows. It honors the paragraph alignment and line spacing attributes of the
containing paragraph and so on. It can be cut or copied to the clipboard and
pasted elsewhere (or dragged and dropped) like a piece of text, either by itself
or with the text that it is inline with.

A graphic can be switched between floating and inline states simply by
right-clicking and choosing Format Picture, then:

if using Word 97, click the Position tab and check or uncheck Float Over
Text.

if using Word 2000, click the Layout tab, select either Inline with Text
or a different Wrapping option, and click OK